It means "you have been caught (doing something bad or not allowed)" or "you are in trouble (now that we have caught you)." Depending on the context, it can be a somewhat friendly or joking phrase (if the action the person has been caught doing is not really that bad). Here are some examples: "He was dealing drugs for a year, but got *busted* by an undercover cop." "She was lying about where she had been going and I *busted* her." "I caught him eating some food after it fell on the floor. Busted!" "Busted" can also be an insulting adjective referring to a physically ugly person or thing. Both of these meanings are pretty slang-y, especially the second.

If your friends say that, "You are so busted." "haha", (in a relaxed, lauhging tone) it means that you did something that will get you in trouble, by authority of certain types (parents, teachers, cops, etc.). or "You are so busted. That sucks" (In a direct tone, but sincere) If a person of authority says, "You are so busted." (in an angry, dissapointed, upset tone), It means you are in trouble right then and there!